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03/30/2011

No 1 Document

Every year, China's central government issues a No 1 Document that outlines the top priority Beijing will focus on for the coming year. Since 2004, China's No 1 Document has focused on agricultural issues. After the droughts and floods last year, China issued the No 1 Document January 29, 2011 narrowing the focus to water conservation.

This year’s No 1 Document will take 10% of the money earned from “transferring" the rights of farmland and invest it in water infrastructure projects. According to the Ministry of Water Resources, China earned 2.7 trillion RMB ($412 billion) from the sale of farmland in 2010. Over the next decade, China plans to invest 4 trillion RMB ($610 billion) into the construction of water infrastructure projects, with the central government and local governments splitting the bill 50-50.

While this sounds very impressive, the Lingdao Juece Xinxi has an interesting article pointing out that China has been underinvesting in water infrastructure projects. Some experts estimate that China has a shortfall of over 3 trillion RMB in water infrastructure projects. They say that it will take over ten years to build up China’s water infrastructure projects.

After visiting China for the study tour, I don’t doubt the Chinese government’s resolve in beefing up investment in water infrastructure. As Matt Nespoli points out in an earlier blog post, the Chinese government no longer needs private dollars to fund its water infrastructure expansion and has put the BOT model to rest. However, I do wonder if China’s focus on infrastructure is the best way to solve the country’s problems with droughts and floods. When we visited the North-South Water Diversion Project, they admitted that the project has taken longer than expected to complete because of problems relocating villagers. Also, there wasn’t much water flowing into Beijing from other projects (at least not yet).